As the society experiences more rapid changes and uncertainties of the environment abound, social capital has newly garnered more spotlight, in addition to human capital and financial capital. Internal resources alone may no longer suffice in creating competitive advantages in the market. Social capital built within social relations with external organization helps the organization create new resource, and plays a crucial role in its survival. Recognizing the importance of social capital, researchers have previously explored social network structures as the antecedent of social capital. In emphasizing the importance of cooperation among organizations, scholars have traditionally looked to Coleman’s theory (1988) as their reference. According to the theory, closed networks encourage cooperation through trust and control mechanism. While previous researches examined Coleman’s theory, researchers have not clarified the exact mechanism of the theory. Additionally, while researchers have extensively analyzed the network on the organizational level, they have rarely focused on analyzing the network on the individual level.This study seeks to cure these deficiencies in the research field by fulfilling two purposes: First, this study aims to examine the relationship between network density and cooperative exchange, focusing on control mechanism at individual level empirically. Second, this study aims to test moderating effects of initial wealth effect. In specific, actors showed enhanced cooperative exchange behaviors inside a dense network than in a sparse network. Actors who have more initial wealth at the beginning are expected to act more cooperatively in a dense network than in a sparse network. In this study, experiments based on prisoner’s dilemmas game are designated to compare the behaviors of actors, who are located on either a sparse or a dense network. Hypotheses were tested by the analysis of the sample consisting of 70 participants, chosen from a wide range of academic majors. Subjects consisted of undergraduate and graduate students, 35 male and 35 female. In order to avoid the learning effect of subjects, two independent experiments were conducted according to each hypothesis. As a result, a statistically meaningful relationship was established between the network density and cooperative exchange behaviors. However, the result did not provide support for the moderating effect of initial wealth effect: t-test coefficient was not significant, although it showed meaningful results on the graphs.This study contributed to the research of social network by examining Coleman’s control mechanism. Also, I examined the exchange relationship on the individual level with structural explanations. It will suggest another angle of approach in organizational psychology. These findings have real-life implications reaching outside of academia: organizations should focus on developing social capital on the institutional level, from within and outside of the organization. In extending the findings of this study, future studies need more samples, especially because the graphs suggested promising results, even though the moderating effect did not result in significant coefficients. A larger sample size may lead to more accurate results. The effects that trust mechanism has in cooperative exchanges need to be further examined.
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